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2018 Supreme(Del) 681
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
Suman Goel & Anr. – Appellants
Versus
Sanjeev Kumar Jain – Respondent
RFA No.98 of 2018
Decided On : 5-02-2018
For the Appellant : Mr. Sanjay Padam Jain, Adv. With Mr. Vinay Kumar Bhasin, Adv.
The court established that loans given on the basis of negotiable instruments, such as cheques, are not covered under the Punjab Registration of Money Lenders’ Act, and friendly loans are not subject to the Act.
Headnote:
Money Lenders' Act - Recovery Suit - CPC - [Section 96 of CPC] - [Section 3 of Punjab Registration of Money Lenders’ Act, 1938] - [Summary: The court allowed exemption, condoned delay in filing the appeal, and dismissed the appeal under Section 96 of CPC. The suit for recovery of a friendly loan was decreed in favor of the plaintiff. The court held that the suit was not barred under the Punjab Registration of Money Lenders’ Act as the loan was given on the basis of a negotiable instrument, i.e., a cheque. The court also noted that friendly loans are not covered under the Act, and reduced the rate of interest granted by the trial court from 18% to 9% per annum.]
Fact of the Case:
The respondent/plaintiff filed a suit for recovery of a friendly loan of Rs.14.50 lacs along with interest at 18% per annum. The appellants/defendants contested the suit, claiming that the cheques were meant for someone else and that the suit was bad due to the respondent/plaintiff not having a license to do money lending business as required by Section 3 of Punjab Registration of Money Lenders’ Act, 1938.
Finding of the Court:
The trial court decreed the suit in favor of the plaintiff as the respondent/plaintiff proved his case, and the appellants/defendants failed to substantiate their defense. The court also held that the suit was not barred under the Punjab Registration of Money Lenders’ Act as the loan was given on the basis of a negotiable instrument, i.e., a cheque.
Issues: The issues included the maintainability of the suit under Section 3 of Punjab Registration of Money Lenders’ Act, misjoinder of parties, and the entitlement of the plaintiff to recover the amount and interest.
Ratio Decidendi: The court held that the suit was not barred under the Punjab Registration of Money Lenders’ Act as the loan was given on the basis of a negotiable instrument, i.e., a cheque. It also noted that friendly loans are not covered under the Act.
Final Decision: The appeal was dismissed, and the rate of interest granted by the trial court at 18% per annum was reduced to 9% per annum for the pendente lite and future period till realization of the decretal amount.
VALMIKI J. MEHTA, J
C.M. No.3752/2018 (exemption)
1. Exemption allowed subject to just exceptions.
C.M. stands disposed of.
C.M.Nos.3755/2018 (for condonation of delay in filing) & 3754/2018 (for condonation of delay in re-filing)
2. For the reasons stated in the applications, delay of 215 days in filing and 10 days in re-filing the appeal are condoned.
C.M. stands disposed of.
RFA No.98/2018 and C.M. No.3753/2018(stay)
3. This Regular First Appeal under Section 96 of Code of Civil Procedure, 1908 (CPC) is filed by the defendants in the suit impugning the judgment of the Trial Court dated 10.1.2017 by which the trial court has decreed the suit filed by the respondent/plaintiff for recovery of Rs.14.50 lacs along with interest at18% per annum.
4. The facts of the case are that the respondent/plaintiff filed the subject suit for recovery of Rs.14.50 lacs along with interest at 18% per annum till realization by pleading that appellants/defendants who were husband and wife were given a friendly loan of Rs.14.50 lacs by means of cheques which were encashed in the account of the appellant no.1/defendant no.1. Since the appellants/defendants failed to repay the loan therefore after serving the legal notice dated 4.7.2015, the subject suit was filed by the respondent/plaintiff.
5. The appellants/defendants filed their written statement and contested the suit by raising various objections. On merits, it was not denied that the cheques were encashed in the account of the appellant no.1/defendant no.1, however it was pleaded that the appellants/defendants are strangers to the respondent/plaintiff and in fact the amounts of the cheques which were given to the appellants/defendants were actually meant to be given to one Sh. Pradeep Mittal and that the respondent/plaintiff had issued the cheques in the name of the appellant no.1/defendant no.1 to clear his part liability towards Sh. Pradeep Mittal. Sh. Pradeep Mittal was stated to be a person who had purchased premises bearing no. I-6/64, 2nd floor, Sector-16, Rohini, Delhi from the respondent/plaintiff without any documentation with an alleged settlement that when the said plot would be sold by Sh. Pradeep Mittal the documentation would be completed by the respondent/plaintiff as the property had remained in the name of the respondent/plaintiff. Sh. Pradeep Mittal was pleaded to be a friend of the appellant no.2/defendant no.2 and engaged in the business of a property broker and financier. Sh. Pradeep Mittal is pleaded to have sold the suit premises to Sh. Shiv Charan Gupta and respondent/plaintiff is pleaded to have executed the sale deed of the suit premises in favour of said Sh. Shiv Charan Gupta on 13.8.2012. Sh. Shiv Charan Gupta transferred the sale consideration of Rs.65 lacs into the account of the respondent/plaintiff and out of this amount the respondent/plaintiff is pleaded to have paid the amount of Rs.14.50 lacs to the appellant no.1/defendant no.1 to clear the respondent/plaintiff’s liability to Sh. Pradeep Mittal. Suit was pleaded to be bad on account of the respondent/plaintiff not having licence to do money lending business as required by Section 3 of Punjab Registration of Money Lenders’ Act, 1938. It was also pleaded that there was no privity of contract between the parties to the suit.
6. After pleadings were complete, the following issues were framed:-
“1. Whether the suit is not maintainable in view of Section 3 of Punjab Registration of Money Lenders’ Act, 1938? OPD
2. Whether the cheques were given by the plaintiff for discharge of his liability towards Pradeep Mittal, as alleged in the WS? OPD
3. Whether the suit is bad for misjoinder of D-2? OPD
4. Whether the plaintiff is entitled to recover any amount from the defendant? If so, what amount? OPP
5. Whether the plaintiff is entitled to any interest? If so, for what period and at what rate? OPP
6. Relief.”
7. Whereas respondent/plaintiff examined two witnesses including himself in support of his case, there was no evidence
